SALES of new cars hit the highest level since 1999 last month as the industry continues to boom.

More than half a million people bought a new car in March as the registration plate changed - a 5.3 per cent increase compared to the same period last year, according to the Society of Motor Manufacturers and Traders (SMMT).

It is the largest number in almost two decades when the bi-annual plate change began.

Alternatively fuelled vehicles saw the largest growth, with sales up by a huge 21.5 per cent.

But demand was also up for diesel and petrol by 4.8 per cent and 4.7 per cent respectively.

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SMMT chief executive Mike Hawes said: "The sector's strong growth in March rounds off a robust first quarter as British consumers continue to demonstrate their appetite for new cars, especially ultra-low emission vehicles.

"This confidence should see registrations remain at a high but broadly stable level over the year, but could be undermined by political or economic uncertainty."

Top of the best sellers was the Ford Fiesta, which has also been the most popular model of the last year, showed the SMMT data.

Volkswagen car sales also last month turned around a five month decline that had set in after the diesel emissions scandal broke last year.

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Experts said the figures were welcome news for the car industry, but cautioned that a potential economic slowdown could take the wind out of the sector.

Howard Archer, chief economist at IHS Economics, said: "A potential concern for the car industry is that increasing uncertainties over the UK economic outlook – particularly ahead of the June “Brexit” referendum could cause fleet operators, which led car sales growth in 2015, to be more cautious in their purchases of new vehicles."